As many as one in five small to medium enterprises (SMEs) in the UK have shrunk over the last three months, according to Zurich’s latest quarterly SME Risk Index.
The Index, which measures the perceived level of business risk faced by SMEs, fell to 39.92 points in the third quarter of the year, down from 42.17 in the second quarter. The scale is measured as the highest level of risk is 100, while one means no risk at all.
However, despite the improvement in confidence in the SME sector, 21 per cent of SMEs still said their business shrunk during the last quarter.
The research also found that a third of SMEs said they faced a medium to high risk of going out of business in the next 12 months from September.
While 22 per cent are now worried about supply chain exposures and another 37 per cent said they had concerns about workforce challenges such as a lack of talent in the current employment pool.
Richard Coleman, Director of SME at Zurich Insurance, said: “It’s great to report again that SMEs are continuing to feel better about the risks their businesses face, reflecting wider signs of growth in the UK economy.”
“However, it’s clear that the wider economic environment is a source of increasing concern for SMEs even as their concerns over some of the more specific risks reduce.”
The survey also found that around 60 per cent of SME owners were not confident that the economic situation will improve within the next quarter, a significant 12 per cent increase over the past three months.
